Spanish Housing Crisis: Youth are Hardest Hit

A recent post on Instagram pointed to the housing crisis for youth in the United States. As of writing this, less than a week later, it had drawn over 50,000 likes and a lot of comments and discussion. It was clear that there is considerable anxiety on this issue and with good reason.

This post, by a social media news and culture site known as “Sociaty”, pointed to the fact that the median age of a home buyer in the USA is now 56-years old. That is up from just 31-years old in 1981.

Digging more deeply, that is an increase by more than six years between 2023-2024, according to an article on MSNBC. Home prices are also up by 39% since 2020, to a median price of $435,000. US Mortgage rates, after decades of being low, remain stuck well above 6% for a 20-year fixed-rate mortgage.

As the same MSNBC article noted:

“The median age of first-time buyers also rose from 35 to 38, while the share of first-timers dropped from 32% to 24% of all buyers for the year ending July 2024. That marks the lowest percentage since NAR started tracking the metric in 1981.”

These are all bad signs for young people and the housing market in the USA. But what of Spain? Is the situation here better or worse and what does the future look like?

Spain’s Stressed Housing Market

Much has been written about Spain’s ongoing housing crisis. And the mass movement that keeps returning to the streets demanding real action – which never seems to materialize.

For youth, the problem is in many ways worse in Spain than it is in the USA. From 2010-2021, the average age of moving out in the USA was 26-27. In Spain, the average age was 30.3 in 2022

Undoubtedly, this is the result of housing costs going through the roof, with rents rising by 80% in the last decade. House prices in Spain have also risen and now cost 7.6x a full salary.

As a result, the average age of a first-time home buyer is now 41-years old, 3 years higher than in the USA. And, according to a Caixa Bank study, the number of independently living young people who own a home has collapsed from 66% in 2002 to 31.8% in 2022.

The jarring reality is that the deeper you dig, the worse the situation looks, not just for young people – but it is the youth who suffer the most intense housing challenges. According to a January article in The Guardian, the numbers are stark:

“The statistics that explain Spain’s housing crisis are equally jarring. Rents rose by 80% over the past decade, outpacing wage increases, and a recent Bank of Spain report estimated that almost half of Spain’s tenants spend 40% of their income on rent and utility bills, compared with an EU average of 27%.”

The frustrating part of all this is that everyone knows what the problem is: housing starts in Spain collapsed and never recovered after the 2008 housing crisis. And yet no one is doing anything about seriously addressing this collapse in order to reverse it.

There is a bright spot, compared to the USA, and that is with mortgage rates. While the USA is stuck above 6% and climbing. The rates in Europe, and thus in Spain, have come down considerably. They are now as low as 2.44%, with an average under 3%, according to howtobuyinspain.com

But with buyers in Spain needing to have at least a 20% down payment, the bar is set higher for first time buyers, who are typically younger. On top of the down payment, buyers must pay expenses and taxes, which equals approximately another 10%.

For a first-time home buyer without much equity, 30% is a large sum. On a €250,000 home, that is €75k.

In the UK, you can purchase a home with as little as 5% down payment. In the USA, the average for a first-time home buyer is 9% but can go as low as 3-3.5%.

Spanish Home Buyers Aid Program

There is a Spanish program that will expire in December 2025 called ICO, which stands for the Official Credit Institute. This provides guarantees on mortgages up to 25% of the value of the home, allowing first time buyers up to the age of 35 to borrow 100% of the home’s price.

Young buyers would still have to cover the costs and taxes on the purchase. As noted above, these equal about 10% of the price, so this isn’t a no money down program. But it is something. With any luck this will be extended.

However, unless there is enough home construction to re-balance the supply and demand curves, prices will continue to rise. According to the Spanish National Institute of Statistics, home prices as of June 2025 were rising at an annualized rate of 12.2%. That is six and a half times the broader rate of inflation which is at a reasonable 1.9%.

While it is a good sign that new housing starts rose by 14.5% in 2024, after a decade of stagnation, it isn’t enough to make up for population growth and new household formation. For instance, last year, the number of home sales grew by 10%. If we look at the sale of new homes, the situation is more unbalanced, with new home sales surging by 23.2% last year.

That equals almost 135k new home purchases in 2024, compared to the completion of just 86K houses last year. The number of housing starts may have grown but is still in deficit compared to demand, at 112k units.

Something has to give and, unfortunately at the moment, it is the future of Spain’s youth. They are unable to move out and unable to begin an independent life. For the moment, the Spanish economic situation looks good, with an expected growth rate of 2.6%. That will be amongst the highest in the EU. Unemployment continues to fall and is expected to drop below 10% in 2026, for the first time in a decade.

This is all good news. But if there is no rebalancing of the housing market, the deferred spending of young people as they save to purchase and move out, will act as a drag on the economy.

It’s not just good ethical policy to provide young people with options to begin their lives. It is good economic policy. Homeowners spend more and increase the economic velocity. Excess savers slow velocity, along with growth in incomes and employment. That would represent a lost opportunity that the current Spanish boom is providing.

By Adam Neale | Property News | July 28th, 2025

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